Correlation Between Genovate Biotechnology and Hung Chou
Can any of the company-specific risk be diversified away by investing in both Genovate Biotechnology and Hung Chou at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Genovate Biotechnology and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genovate Biotechnology Co and Hung Chou Fiber, you can compare the effects of market volatilities on Genovate Biotechnology and Hung Chou and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Genovate Biotechnology with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genovate Biotechnology and Hung Chou.
Diversification Opportunities for Genovate Biotechnology and Hung Chou
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Genovate and Hung is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Genovate Biotechnology Co and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Genovate Biotechnology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Genovate Biotechnology Co are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Genovate Biotechnology i.e., Genovate Biotechnology and Hung Chou go up and down completely randomly.
Pair Corralation between Genovate Biotechnology and Hung Chou
Assuming the 90 days trading horizon Genovate Biotechnology Co is expected to under-perform the Hung Chou. But the stock apears to be less risky and, when comparing its historical volatility, Genovate Biotechnology Co is 1.81 times less risky than Hung Chou. The stock trades about -0.06 of its potential returns per unit of risk. The Hung Chou Fiber is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 835.00 in Hung Chou Fiber on September 14, 2024 and sell it today you would earn a total of 330.00 from holding Hung Chou Fiber or generate 39.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genovate Biotechnology Co vs. Hung Chou Fiber
Performance |
| Timeline |
| Genovate Biotechnology |
| Hung Chou Fiber |
Genovate Biotechnology and Hung Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genovate Biotechnology and Hung Chou
The main advantage of trading using opposite Genovate Biotechnology and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genovate Biotechnology position performs unexpectedly, Hung Chou can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hung Chou will offset losses from the drop in Hung Chou's long position.The idea behind Genovate Biotechnology Co and Hung Chou Fiber pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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